What’s Needed for Solos & Smalls To Innovate? A Legal Ethics Safe Harbor & Crowdsourced Ethics

Solo and small firm lawyers account for roughly sixty-five percent of all attorneys. Unfortunately, as I’ve written before , solos and smalls are grossly underrepresented in the Reinvent Law space – even though solos and smalls have traditionally been (and in my view, still are) the driving force of innovation in the legal profession.

Still, not all solos and smalls innovate and there’s nothing wrong with that either. Some are simply too busy serving clients; others are too practical to innovate just for the sake of looking cool.  But there’s another far more serious obstacle to solo and small firm innovation that many futurists overlook: ethics regulations which have a chilling effect on solo and small firm lawyers.

It’s no coincidence that many of the innovations in the legal profession – the Axioms or RocketLawyers and matchmaking platforms are non-law firm entities that aren’t subject to ethics rules.  As a result, these companies can push the ethics envelope without fear of serious repercussions. By contrast, if a solo or small firms experiment with a new approach to serving clients, like a virtual office space or a networking arrangement, they can lose their license or reputation if it turns out they made the wrong call (like the Connecticut solos who were prosecuted for ethics violations for participating in Total Attorneys’ lead gen program).

Futurists ignore these very real constraints on solos and smalls. And why not? It’s far more provocative to portray solos and smalls as a bunch of luddites with a guild mentality rather than as responsible business owners reasonably assessing risk in a heavily regulated environment.  And frankly, many futurists — particularly those interested in  access to venture capital — stand to benefit from the ethics hurdles that keep solos and smalls in their place. After all, if ethics rules stymie solos and smalls from competing with new business models, that simply makes it easier for these #altlaw ventures to push solos and smalls right out of the market.

So how can we provide solos and smalls with guidance as well as insulation from punishment making the wrong decision? Two ways: ethics safe harbors and crowdsourcing ethics opinions. Here’s how these would work.

Ethics Safe Harbor

States would create a safe harbor within ethics rules to protect lawyers from disciplinary sanctions if they can demonstrate that they were diligent in researching the ethics rules associated with their action and made a reasonable decision based on their analysis. A call to the ethics hotline would not suffice to trigger the safe harbor; rather, lawyers would need to produce a formal opinion letter from an ethics attorney or submit their own research and analysis of the issues.

Safe harbors are a common approach across sectors to mitigate regulatory uncertainty or encourage adoption of new innovations. For example, without the safe harbor provisions of the Digital Millennium Copyright Act (DCMA), many entrepreneurs may have been deterred from establishing content platforms because of the potential for of liability for users’ copyright infringement.  As companies move from paper to electronic storage of documents, Rule 37(e) of the FRCP  provide a safe harbor from sanction for parties “who fail to provide electronically stored information lost as a result of route, good-faith operation of an electronic information system.” Fifteen years ago, Richard Zorza, a legal innovator in his own right, floated the concept of safe harbors to encourage experimentation and innovation to meet the goals of ethics rules, in his article, Reconceptualizing the Relationship Between Legal Ethics and Technology.

Crowdsourced Ethics

A safe harbor protects solos and smalls who make the wrong choice – but it won’t necessarily advance the state of the law or provide broader guidance. That’s where ethics crowdsourcing comes in.  Right now, most bars lack the resources to offer timely opinions on new developments. So why not crowdsource ethics analysis? The ABA and bar hotlines could maintain a site – like an Ethics Quora – where they would post the ethics questions they receive via the hotline and through the formal opinion process. Lawyers could then select a question to research and analyze in exchange for CLE credit. Lawyers from different jurisdictions could also work together to collaborate on a single analysis instead of having a separate decision issue from each state. Over time, the profession would develop a body of advisory law on ethics that would evolve with new technologic developments while educating lawyers and providing them with real guidance.

Some would argue that the future has no place for the risk-averse and as such, we shouldn’t accommodate lawyers who don’t have the guts to experiment. After all, there are more than enough lawyers willing to defy or simply ignore ethics rules to innovate. But are the unethical lawyers who flout ethics rules the ones who we really want to reward or embrace in the future of law (if the answer is yes, then it’s probably time to pack up and go home)?

Another option is to ignore ethics entirely by opening the door to outside investment in law firms, thereby giving them more latitude to depart from traditional ethics analysis. That’s a common battle cry of the futurist movement too – though I have yet to see anyone address how we protect consumers and the public from the fallout of outside investment gone wrong.  

Still, if we don’t hurry up and innovate ethics, outside investment or surrendering the profession to those who don’t care about ethics are the inevitable result. To its credit, the ABA just completed its Ethics 2020 program designed to revisit existing ethics rules in light of technology changes. But Ethics 2020 merely proposed new regulations; it didn’t develop a new paradigm for legal ethics in disruptive and transformative times.

If we really want innovation to happen while protecting what makes our profession (yup, used the “P” word) special (confidentiality, loyalty to the client, competency and zealous representation, among other things), we need to make legal ethics and compliance more manageable. And if we really want to improve the way that lawyers serve clients, we can’t write off 65 percent of practicing lawyers from the future of law, particularly when they might be open to new ideas if they could hear the downsides as well as the upside and didn’t have to put their law license on the line to enjoy some of the benefits. Ethics safe harbors and crowdsourcing ethics analysis are one way to bring more lawyers on board and more importantly, to preserve what’s best about the legal profession rather than destroy it entirely.